Wednesday, July 2, 2014

Urge Your Congressional Representative to Push the TTB on 5.36(d)

In mid-May the following headline appeared in this space. "TTB May Crack Down on Section 5.36(d) Violations." That was, to some extent, wishful thinking. TTB was happy to accept from me a list of approximately 30 known 5.36(d) violations compiled by Wade Woodard and others, but that's about as far as it went. The rest of the story is here.

Although 5.36(d) is the focus, there have been many problems lately with TTB seemingly not doing its job. Yes, they are buried with new product applications, but that's no excuse. Part of their job is to ensure that all alcoholic beverage product labels are accurate and in compliance with all of the bureau's rules. If that job is important then they have to find a way to do it successfully, no excuses. If it's not important then abolish it and save some money. Doing a half-assed job benefits no one.

Part of the problem is that TTB is not transparent, as explained below. It might make their job a little easier if they just did a better job of letting producers know what's expected of them.

I have communicated about this with TTB often and have decided to escalate matters by writing to my congressional representative, Jan Schakowsky (D, IL 9th). I'm also sending a version to the co-chairs of the Congressional Bourbon Caucus, Democrat John Yarmuth and Republican Brett Guthrie, both of Kentucky. I am also sending a version to Frank Coleman, SVP of the Distilled Spirits Council; and Eric Gregory, President of the Kentucky Distillers' Association. I urge you to do the same. Here is my letter to Representatives Yarmuth and Guthrie. Feel free to copy it.

I am writing to you in your capacity as co-chair of the Congressional Bourbon Caucus.

As I’m sure you know, the main federal agency that regulates beverage alcohol is the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (TTB). They do this primarily through label approvals. They have many rules about the labeling of alcoholic beverages. Right now I’m only concerned with one, 27 CFR 5.36(d), which requires that "the State of distillation shall be shown on the label of any whisky produced in the United States if the whisky is not distilled in the State given in the address on the brand label."

The address on the brand label can be anywhere the producer has a place of business, or a post office box, but if that address is in a state other than the state of distillation, then the state of distillation must be disclosed separately.

This rule is widely violated, especially by small producers who don’t distill but buy whiskey from actual distillers or intermediaries. Violations are easy to spot because all of the distilleries that sell whiskey to these producers are in Kentucky, Tennessee, or Indiana. If a producer uses an address not in one of those three states it is almost certainly in violation of rule 5.36(d).

This issue has become a ‘cause’ among hardcore bourbon enthusiasts. Thomas Hogue, TTB’s press and congressional liaison, has confirmed to me that the rule means exactly what it says. He asked for and I provided him with a list of approximately 30 companies whose product labels are in violation. I have talked to some of the companies, who claim to be unaware of the rule.

When I communicate with Mr. Hogue and others at TTB, they are always very nice and respectful. The problem is that their policy is to discuss matters like this with the affected ‘industry members’ (i.e., the producers) and not with the public (i.e., me). I don’t expect to suddenly see labels change. What I’d like is an acknowledgement that many violations of 5.36(d) have occurred and TTB is taking steps to ensure that all industry members are aware of their duty to comply with it. I would like to know that TTB is being more diligent about enforcing this rule, perhaps by issuing a pointed reminder to all American whiskey producers. Maybe TTB should direct distilleries who sell bulk whiskey to inform their customers of this requirement.

That sort of thing.

TTB essentially operates on an honor system. It doesn’t investigate label claims. It only finds out about violations if someone, usually a competing ‘industry member,’ tells them. If TTB was a bit more transparent, they might have better compliance. At least producers couldn’t claim not to know about rules such as 5.36(d).

This particular rule is important in its own right, but also because if people feel they can’t count on TTB to do its job in one area, how can we trust them to do anything right?

Part of good government is government that simply does the day-to-day things it is supposed to do capably. That’s ultimately what this is about. I hope you will look into it.

Sincerely,
Charles K. Cowdery
Author of Bourbon, Straight: the Uncut and Unfiltered Story of American Whiskey

Wrong. It benefits contributors to political campaign funds and those most likely to profit from government favoritism (often the same folks, of course).

The problem isn't that there's too much "gummint". The problem is that there isn't ENOUGH. When will the TV and talk-radio pundits (and bloggers, I guess) understand that it's not legislation (either too much or too little) that's the problem; the problem is a lack of enforcement, whether in felony crimes or product labeling. The TTB are not lawmakers; they're law ENFORCERS -- that is, cops. I'm not buying their cries of "Oh, pity us. We don't know what we're doing!" Their mission is pretty clear. If a liquor producer prints something on the label, it should not be misleading. Unless a good lawyer can show that saying, for example, that the contents are Tennessee whiskey doesn't require that the contents actually be Tennessee whiskey, there is no excuse for issuing a permit to use that label in commerce. If it later turns out, in court, that such a decision was erroneous, let the changes be made then. We all know of new distillers who can't get COLA approval for legitimate products while existing distillers (often NDA bottlers) can bottle up product with no worries about enforcement. I personally know of one distiller who mixes his 100% (so he claims) wheat whiskey with Kentucky bourbon and labels the result as "bourbon". No problem-o.

Rotten politicians are pretty much what everyone expects, no matter which side of the aisle you vote for. Rotten cops are unacceptable, or at least should be, to anyone not profiting from the corruption.